Excess TFSA amount correspondence explained

The CRA can send out a letter or a proposed TFSA return to Canadians who, under certain situations, may have over contributed to their TFSA. You can also receive a proposed TFSA return if you made contributions to your TFSA while you were not a resident of Canada.

Excess TFSA amount letter

If you receive an excess amount letter and you have already removed the excess TFSA amount, you do not have to do anything else. If you have not removed the excess, it should be removed immediately. For information on your current year room limit, go to My Account (for your room limit as of January 1) or complete Form RC343, Worksheet - TFSA contribution room if you have contributed to your TFSA in the current year.

The proposed TFSA return package

The proposed TFSA return package normally includes the following:

• Cover letter – It provides general information about TFSA rules and instructions regarding what you need to do to respond to the proposed return.
• RC243-P, Proposed Tax-Free Savings Account (TFSA) Return - This proposed TFSA return shows the taxes we have calculated and is based on the information we received from your issuers. The proposed TFSA return is not a formal assessment of tax.

Responding to the proposed return package

This proposed return does not represent a formal assessment of tax. Although you cannot file a notice of objection on a proposed TFSA return, the following options are available to you:

1. If you agree with the information on the TFSA return, sign, date, and include your social insurance number. You can make your payment electronically, by going to Pay now with My Payment. We will issue an assessment based on this return.
2. If you do not agree with the TFSA return and you would like us to review your situation, send a letter to the address indicated below. Include a detailed explanation and any additional documentation you have about the excess contributions along with proof that your excess TFSA amount has been corrected.

TFSA Processing Unit
Canada Revenue Agency
Sudbury Tax Centre
Post Office Box 20000, Station A
Sudbury ON  P3A 5C1

Or

TFSA Processing Unit
Canada Revenue Agency
Winnipeg Tax Centre
Post Office Box 14000, Station Main
Winnipeg MB  R3C 3M2

We will review your request and send you a letter explaining our decision. If we do not receive a response from you, we will issue an assessment based on the information on file. This assessment will include any penalties and interest that could apply.

Waiver or cancellation of the TFSA taxes 

We can waive or cancel all or part of the taxes if we determine it is fair to do so after reviewing all factors, including whether:

• the tax arose because of a reasonable error
• the extent of which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under the Income Tax Act
• the extent to which payments have been made from the person's TFSA

The waiver is limited to tax paid under Part XI.01 and not taxes paid under any other Part of the Income Tax Act.

To consider your request, we need a letter that explains why the tax liability arose, and why it would be fair to cancel or waive all or part of the tax. Send your letter to one of the following addresses: 

TFSA Processing Unit
Canada Revenue Agency
Sudbury Tax Centre
Post Office Box 20000, Station A
Sudbury ON  P3A 5C1

Or

TFSA Processing Unit
Canada Revenue Agency
Winnipeg Tax Centre
Post Office Box 14000, Station Main
Winnipeg MB  R3C 3M2

You can also submit these documents through My Account.  For more information on how to submit documents online, go to Submit documents. For information on how to access or open My Account, go to My Account for Individuals.

What should you do if you disagree with your assessment?

If you disagree with the assessment or reassessment of your TFSA tax payable, contact us for more information. If you still disagree, you can make a formal objection by sending a filled out Form T400A, Notice of Objection – Income Tax Act, or a signed letter to the Chief of Appeals at your tax services office or tax centre within 90 days of the date of the notice of assessment or notice of reassessment.

For more information, see Pamphlet P148, Resolving your Dispute: Objections and Appeal Rights under the Income Tax Act.

Forms and publications

• Form RC243, Tax-Free Savings Account (TFSA) Return
• Form RC243-SCH-A, Schedule A – Excess TFSA Amounts
• Form RC243-SCH-B, Schedule B – Non-Resident Contributions to a Tax-Free Savings Account (TFSA)
• Form RC343, Worksheet - TFSA contribution room
• T400A, Notice of Objection – Income Tax Act
• Pamphlet P148, Resolving your Dispute: Objections and Appeal Rights under the Income Tax Act